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WITH Statistics SA having recently released figures showing that unemployment has hit a new high, I thought I would review some of the global trends in unemployment.
The first thing to note is that Spain does currently have a higher unemployment rate than South Africa – 27% compared to 25.6% for the second quarter of 2013 (the International Monetary Fund’s unemployment figure for South Africa is marginally higher at 25.7%, but this is an annual total).
The difference between Spain and South Africa, however, is that Spain’s unemployment is predicted to decrease annually for the next five years whereas South Africa’s is expected to increase annually.
Unfortunately, unemployment figures for African countries are quite irregular (I checked the World Bank, IMF and International Labour Organisation) and so it is nearly impossible to say how South Africa is faring in the African context.
That being said, I do not believe we should be comparing ourselves to other African countries when we consider ourselves a valuable member of the south-south cooperation forum Ibsa (India, Brazil and South Africa) and, of course, the Brics (Brazil, Russia, India, China, South Africa).
India’s data is again irregular but the latest figures (sourced from the World Bank and ILO) suggest that in 2010, India’s unemployment was just 3.5%, compared to South Africa’s 24.9%. Our unemployment is consequently compared to the remaining three countries: Brazil, Russia and China.
Excluding South Africa, Brazil has the highest unemployment rate according to the IMF. Any guesses as to how low or high it may be? For 2013, Brazil’s unemployment rate is stated as 6% - South Africa’s unemployment is roughly four times higher.
Interestingly, the IMF predicts that Brazil, Russia and China’s unemployment rates will remain constant till 2018 and, as previously mentioned, South Africa’s will rise. Brazil is predicted to increase to and then remain at 6.5%, China at 4.1% and Russia 5.5%.
The individual trends in the data reveal some further points of interest, which help explain the IMF’s predictions for the four countries:
i) Brazil’s unemployment peaked in 2003 at 12.3% and has been declining quite constantly ever since;
ii) Since 2000, China’s unemployment has never been higher than 4.3%, a level it reached in 2003 and 2009;
iii) Aside from a spike in unemployment following the global economic crisis, Russia’s unemployment has been declining steadily since 2000 when it was at 10.6%; and
iv) South Africa’s unemployment rate decreased between 2002 and 2008; however, following the global economic crisis, it has continued to rise. Further, since 2000 unemployment has always been more than 22%.
Evidently, our Brics partners are doing something right and, in the case of Russia, have managed to weather the global economic crisis remarkably well; the same cannot be said of South Africa. So what is the problem?
According to the World Bank and International Finance Corporation’s Doing Business 2013 report, it is not simply the “ease of doing business”: South Africa ranks far above its Brics competitors at 39th out of 185 countries (Brazil ranks 130th, China 91st and Russia 112th).
So it must be something else.
To hopefully find the answer, I turned to the raw data of the Enterprise Surveys, which provide firm-level data from over 135 000 establishments in 135 countries and are used to benchmark the quality of the business environment across the globe.
Within the data, “Crime, theft and disorder” was identified as the biggest obstacle in South Africa and relatively negligible in the other three. Further, only 5.9% of South African firms identified labour regulations as a major constraint and 8.7% identified an inadequately educated workforce as a major constraint.
The problem of crime, theft and disorder was common among small, medium and large firms.
Crime is so problematic because it drives up the cost of doing business. For example, resources need to be diverted from productive uses to cover security costs.
Aside from the immediate loss in productivity, foreign and domestic investors perceive crime as an indication of social instability, resulting in lost investments and consequently lower growth.
Lastly, commercial disputes between firms and their clients occur regularly in the course of doing business and resolving these disputes can be challenging when legal institutions are weak or non-existent. In 2007, roughly 60% of the firms surveyed perceived the courts to be fair, impartial, and uncorrupted.
Can it be as simple as resolving South Africa’s crime problem?
- Fin24
*Geoffrey Chapman is a guest columnist and trade policy expert at the SABS. Views expressed are his own.
The first thing to note is that Spain does currently have a higher unemployment rate than South Africa – 27% compared to 25.6% for the second quarter of 2013 (the International Monetary Fund’s unemployment figure for South Africa is marginally higher at 25.7%, but this is an annual total).
The difference between Spain and South Africa, however, is that Spain’s unemployment is predicted to decrease annually for the next five years whereas South Africa’s is expected to increase annually.
Unfortunately, unemployment figures for African countries are quite irregular (I checked the World Bank, IMF and International Labour Organisation) and so it is nearly impossible to say how South Africa is faring in the African context.
That being said, I do not believe we should be comparing ourselves to other African countries when we consider ourselves a valuable member of the south-south cooperation forum Ibsa (India, Brazil and South Africa) and, of course, the Brics (Brazil, Russia, India, China, South Africa).
India’s data is again irregular but the latest figures (sourced from the World Bank and ILO) suggest that in 2010, India’s unemployment was just 3.5%, compared to South Africa’s 24.9%. Our unemployment is consequently compared to the remaining three countries: Brazil, Russia and China.
Excluding South Africa, Brazil has the highest unemployment rate according to the IMF. Any guesses as to how low or high it may be? For 2013, Brazil’s unemployment rate is stated as 6% - South Africa’s unemployment is roughly four times higher.
Interestingly, the IMF predicts that Brazil, Russia and China’s unemployment rates will remain constant till 2018 and, as previously mentioned, South Africa’s will rise. Brazil is predicted to increase to and then remain at 6.5%, China at 4.1% and Russia 5.5%.
The individual trends in the data reveal some further points of interest, which help explain the IMF’s predictions for the four countries:
i) Brazil’s unemployment peaked in 2003 at 12.3% and has been declining quite constantly ever since;
ii) Since 2000, China’s unemployment has never been higher than 4.3%, a level it reached in 2003 and 2009;
iii) Aside from a spike in unemployment following the global economic crisis, Russia’s unemployment has been declining steadily since 2000 when it was at 10.6%; and
iv) South Africa’s unemployment rate decreased between 2002 and 2008; however, following the global economic crisis, it has continued to rise. Further, since 2000 unemployment has always been more than 22%.
Evidently, our Brics partners are doing something right and, in the case of Russia, have managed to weather the global economic crisis remarkably well; the same cannot be said of South Africa. So what is the problem?
According to the World Bank and International Finance Corporation’s Doing Business 2013 report, it is not simply the “ease of doing business”: South Africa ranks far above its Brics competitors at 39th out of 185 countries (Brazil ranks 130th, China 91st and Russia 112th).
So it must be something else.
To hopefully find the answer, I turned to the raw data of the Enterprise Surveys, which provide firm-level data from over 135 000 establishments in 135 countries and are used to benchmark the quality of the business environment across the globe.
Within the data, “Crime, theft and disorder” was identified as the biggest obstacle in South Africa and relatively negligible in the other three. Further, only 5.9% of South African firms identified labour regulations as a major constraint and 8.7% identified an inadequately educated workforce as a major constraint.
The problem of crime, theft and disorder was common among small, medium and large firms.
Crime is so problematic because it drives up the cost of doing business. For example, resources need to be diverted from productive uses to cover security costs.
Aside from the immediate loss in productivity, foreign and domestic investors perceive crime as an indication of social instability, resulting in lost investments and consequently lower growth.
Lastly, commercial disputes between firms and their clients occur regularly in the course of doing business and resolving these disputes can be challenging when legal institutions are weak or non-existent. In 2007, roughly 60% of the firms surveyed perceived the courts to be fair, impartial, and uncorrupted.
Can it be as simple as resolving South Africa’s crime problem?
- Fin24
*Geoffrey Chapman is a guest columnist and trade policy expert at the SABS. Views expressed are his own.
